Account reconciliation concerns a process for reconciling balance discrepancies that exist between amounts recorded in an account and the original transaction amounts on which the account records are based. One common form of account reconciliation is found in the area of personal finance. Almost everyone is familiar with reconciling his/her personal checkbook with the monthly statement received from the bank. The person examines the check stub or copy of the actual check as written (i.e., the source information) against the bank statement (i.e., the account entry) for any differences. When a discrepancy is found, the person can contact the bank to resolve or reconcile the difference.
While account reconciliation might appear rather basic in the context of personal finance, the practice becomes more involved when applied to corporations or other entities that make thousands of entries per month. Even more complex is the practice of account reconciliation for large multinational corporations having numerous divisions and business units located around the globe to sell many products and services worldwide. It is not uncommon for such multinational corporations to have tens of thousands of account entries per month. Account reconciliation at this level involves more sophisticated issues, such as handling multiple currencies and accommodating different regional and/or national accounting rules and regulations. Moreover, the accounting personnel tasked with transaction entry and account reconciliation (e.g., those who make the original entry, perform any subsequent account reconciliation, review any such reconciliation, and audit the same) are often not physically located in the same department, or even in the same country.
In addition to the inherent complexity of account reconciliation, large corporations operate in a regulatory environment that seeks to ensure accurate and transparent reporting of financial data. There is a renewed premium being placed on accurate financial accounting and reconciliation plays a significant role.
Accordingly, there is continuing need for improved account reconciliation processes.